University vice-chancellor pay, performance and (asymmetric) benchmarking
Adelina Gschwandtner () and
Richard McManus ()
Studies in Economics from School of Economics, University of Kent
We study the pay of UK universities chief executives (‘vice-chancellors’) over a ten year period. Although there is a correlation between pay and performance, with better performing institutions paying higher salaries, we find limited evidence that this relationship is causal; that is, we find no statistically significant link that a change in pay leads to a change in performance, or vice-versa. Instead, we find strong support for an asymmetric benchmarking behaviour, where those institutions with below average pay increase their vice-chancellor’s salaries quicker than those with above average pay. We simulate a model whereby different institutions target different places of the distribution of salaries and demonstrate that inflation of pay can be explained by this behaviour.
Keywords: Executive Compensation; Performance Pay; Efficiency Wages; Benchmark (search for similar items in EconPapers)
JEL-codes: G3 J33 Z13 (search for similar items in EconPapers)
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